'Desk Top' has Market in the Bag

When you are walking home, laptop in hand, have you ever wondered who actually makes the seemingly millions of bags that just about everyone seems to carry? Whether you own a Dell, IBM or HP laptop, the chances are high that the case you carry it around in was produced in one Owen Inglis' factories. The Australian entrepreneur employs an army of 9,000 workers in his Guangdong factories turning out millions of bags every month, from baby bags, to laptop carrying cases to luxury handbags. Today, his company accounts for a sizable percentage of all bags produced in the world -- not bad considering that only 12 years ago he was running a family business in Hong Kong importing food and beverages. In 1995, a friend introduced him to a businessman who was looking to set up a trading company dealing in office accessories, and persuaded Mr Inglis to join him as a partner of the new company that they christened Desk Top. The business got off to a strong start, exporting office accessories and a few bags to the U.S. Their bag business went into high gear after Desk Top struck a deal with Decor, an Australian bag company, to design a new line of cooler bags. Soon after, Desk Top was supplying around 90% of the Australian cooler bag market under the Decor brand. "That was the first major success that we had in the bag manufacturing business," Mr Inglis said. "I guess our success was through innovation, clever designs and different shapes. Also, you have to remember that the market hadn't seen anything like that at the time, and of course the product that we introduced was a quality bag." Hundreds of copycats seized on the success of his cooler bags to manufacture cheap, low quality imitations. Faced with cut-throat competition and razor-thin margins, Mr Inglis decided to withdraw from the mass cooler bag business four years ago, but still produces quality baby bags. "These are more complicated to produce and also mothers are willing to pay a decent price for a quality product," he said. At that time, lap top computers were starting to go mainstream, so knowing an opportunity when he saw one, Mr Inglis switched production to portable computer carrying bags, and managed to secure a major deal with Targus, which sells around 60% of the world's computer carrying case market. His business partner, however, disagreed with the switch, which was struggling to make a profit at the start. Confident the new line had huge potential, Mr Inglis, as the major shareholder, sold his family's food company to buy out his partner and focused on growing the bag business. It quickly became obvious that he had made the right decision. Desk Top soon moved back into the black, and has been growing by leaps and bounds annually ever since, supplying computer bags to Targus' OEM customers, Dell, Lenovo, HP and other companies. To diversify production, two years ago, Mr Inglis ventured into the luxury handbag and fashion bag market. Currently, he has 1,400 workers dedicated to producing handbags, which is expanding quickly with orders from some of the most prestigious names in the luxury handbag business being among his client list. Like many manufacturers in Southern China, however, Desk Top is facing new challenges, not least rising costs and finding the right workers to keep up with rising orders. Doing business in China is also becoming increasingly difficult, especially with revisions to the processing trade policy. "When I started 15 years ago, manufacturing in China was a lot easier than it is today. A lot of things are much more difficult today -- transportation, manpower, regulations, etc. Now, the business environment in Southern China for light industry manufacturers like myself has changed entirely, and costs just keep going up 20-30% every year," he said. Although his workforce is quite stable, he would like to raise the headcount by about 15%, and hopes that offering new workers a solid training program will encourage job seekers to join his company. He expects the Mainland's new Labour Contract Law, which came into effect on January 1, 2008, will help companies retain staff. "To have a contract actually will be beneficial to both sides," he said. Despite the challenges of operating a successful business in today's China, Mr Inglis is confident Desk Top can continue to enjoy its annual double-digit growth, which he attributes to the close relationship he has built up with customers, good service and creative design capabilities that he has developed for the mature market.